In 2019 Fischer Corporation changed its method of inventory

In 2019, Fischer Corporation changed its method of inventory pricing from LIFO to FIFO. Net income computed on a LIF?as compared to a FIFO basis for the four years involved is; (Ignore income taxes.) LIFO FIFO 2016 $89,148 S97,698 2017 96,330 100,434 2018 99,180 104,196 2019 105,450 105,678 Indicate the net income that would be shown on comparative financial statements issued at 12/31/19 for each of the four years, assuming that the company changed to the FIFO method in 2019. Net Income 2016 2017 2018 2019 Assume that the company had switched from the average cost method to the FIFO method with net income on an average cost basis for the four years as follows: 2016, $80,400; 2017, $86,120; 2018, s90 300; and 2019 $93,600. Indicate the net income that would be shown on comparative financial statements issued at 12/31/19 for each of the four years under these conditions. Net Income 2016 2017 2018 2019 Assuming that the company switched from the FIFO to the LIFO method, what would be the net income reported on comparative financial statements issued at 12/31/19 for 2016, 2017, and 2018? Net Income 2016 2017 2018

Solution

Solution (1)

Working: comparative net income=

FIFO - LIFO

2016 = 97,698- 89,148 =8,550

2017 = 100,434- 96,330 =4,104

2018 = 104,196- 99,180 =5,016

2019 = 105,678- 105,450=228

Solution b

Working

FIFO - average cost

2016 = 97,698- 80,400 =17,298

2017 = 100,434- 86,120 =14,314

2018 = 104,196- 90,300 = 13,896

2019 = 105,678- 93,600 = 12,078

Solution (c)

	Net income
2016	8,550
2017	4,104
2018	5,016
2019	228